The net profit of the private bank South Indian Bank increased by 17.3% compared to the previous year in the fourth quarter of fiscal year 2027 (Q1 FY27), reaching 377.63 crore rupees. This growth was driven by an increase in net interest income and a reduction in provisions.
In Q1 FY27, the bank recorded a net profit of 377.63 crore rupees, compared to 321.95 crore rupees in the same period last year (Q1 FY26). Net Interest Income (NII), which is the difference between received and paid interest, grew by 23.05% year-on-year, amounting to 1025 crore rupees. However, other income of the bank decreased by 39% year-on-year, totaling 379 crore rupees.
The bank's Net Interest Margin (NIM) for the reporting period was 3.23%, higher than the 3.03% recorded in Q1 FY26. Provisions (excluding tax) decreased by 64.8% year-on-year, falling from 239 crore rupees in Q1 FY26 to 84 crore rupees.
During the quarter, the bank's retail deposits grew by 13.7% year-on-year, reaching 1.24 trillion rupees. The share of low-cost current account savings deposits (Casa) increased to 32.98% from 32.06% in Q1 FY26. Non-Resident Indian (NRI) deposits increased by 12.8% year-on-year, reaching 36,432 crore rupees. The total volume of gross advances grew by 17.01% year-on-year, amounting to 1.04 trillion rupees. Meanwhile, corporate segment loans increased by 12.4% year-on-year to 41,704 crore rupees, and gold loan segment saw a sharp jump of 43% year-on-year, reaching 7,484 crore rupees.
The bank's asset quality improved: the Gross Non-Performing Assets (GNPA) ratio as of June 30, 2026, stood at 1.38%, compared to 3.15% on March 31, 2026. The Net NPA ratio reached 0.26%, down from 0.68%.
P. R. Seshadri, Managing Director and CEO of South Indian Bank, noted that the bank's strategy continues to focus on stable profitability, high asset quality, a sustainable loan portfolio, and a robust retail liability portfolio. He added that the bank is refining its organizational structure and utilizing digital technologies to achieve business goals. Seshadri emphasized that there was consistent growth across all target segments during the reporting period, with the main focus being on attracting quality assets in areas such as corporate lending, auto loans, and gold loans. In line with the strategic intent of 'Profitability through growth in quality lending', the bank successfully attracted new low-risk loans, ensuring a balanced and healthy credit portfolio.
Commercial banks demonstrated an acceleration in lending growth, reaching a two-year peak of 18.6% year-on-year (Y-o-Y) for the period ending June 27. At the same time, banks attracted nearly 7 trillion rupees in deposits as lenders intensified efforts to meet quarterly targets.
According to the latest data published by the Reserve Bank of India (RBI), in the last two weeks of June, banks disbursed loans worth 3.8 trillion rupees, and deposits increased by 6.97 trillion rupees.
A significant part of the lending growth may be attributable to loan disbursements under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, which showed high demand among micro, small, and medium enterprises (MSMEs). The government issued over 140,000 guarantees worth more than 1.55 trillion rupees under ECLGS 5.0, launched in May.
Saurabh Bhalerao, Director and Head of BFSI Research at CareEdge Ratings, noted that lending growth was supported by multiple factors. He suggested that some of the increase is related to disbursements under the ECLGS 5.0 scheme, as well as the fact that yields in the debt market directed infrastructure financing and other corporate borrowings towards banks. Furthermore, the demand for corporate lending contributed to the increase in lending. However, in his opinion, this momentum is likely to weaken as geopolitical tensions decrease and debt market yields ease, making market borrowings more attractive.
As of the end of May, sectoral distribution of loans showed broad growth across all segments. Industrial lending grew by 17.5% year-on-year, supported by sustained expansion in micro, small, and medium enterprise lending, as well as in the medium sectors. Service sector lending increased by 20.4% year-on-year, while retail loans grew by 15.4%. Agricultural lending showed a growth of 14.9% during the reporting period.
It is worth noting that bank lending growth outpaced the growth of Non-Banking Financial Companies (NBFCs). If bank lending grew by 17.7% year-on-year by the end of May, the growth of NBFC lending was 14.2% over the same period.
In March 2026, banks attracted 12.2 trillion rupees in deposits, and loans increased by 5.92 trillion rupees. Deposit growth by the end of March was 13.5% year-on-year. Meanwhile, the gap between lending growth and deposit growth continued to exceed 500 basis points.
